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The Citizens League Minimum Wage Study Committee met on Thursday, July 12, 2018, at the University of St. Thomas. Check out last’s week recap on the eighth meeting here if you missed it.

Co-Chairs Rick Varco and B Kyle asked the committee members to reflect on June 28 meeting. The members appreciated hearing from the low wage worker panel. The committee thought the restaurant owner from Seattle gave meaningful insights on her experience with $15 minimum wage in her community, but it does not feel relatable to many of the members since the two cities have their own unique challenges.

One committee member expressed an opinion that the new minimum wage ordinance must be coupled with an action plan educating business owners on how to sustain their business with the challenges that will come their way.

Thomas Durfee updated the committee on his findings for pay levels by race/ethnicity. Thomas indicated that these data sets do not have a specific breakdown of the Hmong and Somalian population, though they are two of the largest ethnic groups in Minnesota. One takeaway from his presentation that drew comment from the committee was the Share of Race/Ethnicity by Pay Level, which showed that 20% non-white Hispanic are making below $7.76 per hour vs 8% of white Non-Hispanic. His presentation can be found here.

The next agenda item was the “Tip Penalty Panel” that consisted of servers, a cook, state and federal staff, and restaurant owner/committee member Sam Peterson. All are opposed to a tip adjustment.

Eli Edleson-Stein, a server at St. Genevieve and organizer with Restaurant Opportunities Center, presented on their view of a tip adjustment: “A tip penalty is a policy that allows an employer to pay a worker a subminimum wage if that worker receives tips.” The Center’s main concern is that employers are legally required to make up the difference but that accountability often doesn’t happen. According to Eli’s presentation, the average tipped wait staff in St. Paul makes $12.77 per hour, compared to the top 30 percentile of wait staff in St. Paul averaging $20.31 per hour. And not every server has the opportunity to work at a fine dining restaurant where wages are exponentially greater than the average. Eli credited Minnesota not having a tip adjustment for over 30 years which resulted in the fewest in poverty compared to our neighboring states where tipped workers are experiencing 20% - 25% poverty. Eli’s presentation and additional resources on a tip adjustment can be found here.

Sam Peterson, committee member and owner of Kyatchi, shared his company’s specific experience on how the month of June 2018 looked like for his businesses – and how a $15 wage will impact his business. His average server and bartender made $23/hr in tips + $9.65 minimum wage = $32.65/hr after 20% of the tips are generally shared with the staff. Sam does not believe the $15 minimum wage “will collapse the restaurant industry or that servers are all going to lose their jobs.” Sam’s comments can be found here.

Kristin Tout, Assistant District Director of U.S Department of Labor, Wage & Hour Division, recognizes that enforcing employers’ legal obligation to guarantee rightful wages to employees will continue to be challenging. In Kristin’s line of work, some employers already not paying their employees correctly – though she acknowledges that most errors appear to be due to lack of understanding rather than intent to defraud. Enforcing a tip adjustment will only add on to Kristin’s load. One panel member disagreed with her -- Ken Peterson, Commissioner of Minnesota Department of Labor and Industry, said “there will be loses but not at macro”.

The panel also shared their sexual harassment experiences from customers, which ranged from comments to touching and inappropriate behavior. Harassment was more prominent in gender discrimination, according to the three servers. The context of this discussion is that servers who depend on tips for a good portion of their income can feel unduly pressed to endure harassment.​The committee discussed in depth their next steps after hearing from the panel. Next week, the committee will be hearing a report on firm “birth and death” rates (that is, the time when a business is created or goes out of business).